Industry group expects retail sales to grow 4.1% in 2014

The National Retail Federation, the industry trade group for retailers, on Thursday released its economic forecast, projecting improved sales in stores and online this year despite some consumers remaining cautious.

The organization said it expects retail sales, which exclude car, fuel and restaurant sales, will increase 4.1 percent this year. That's a slight improvement over sales growth for 2013, which preliminary estimates put at 3.7 percent. The group also projects Internet retail sales in 2014 will grow between 9 and 12 percent, underscoring the continued shift to online and mobile shopping.

Economists with the National Retail Federation credited national GDP growth -- expected to be between 2.6 and 3 percent this year -- falling unemployment rate and the rebound of the housing sector for the optimistic outlook. But they also warned that political battles over the debt ceiling underway in Congress, changes in health care costs associated with the new health care law and the wild winter weather that has hit some parts of the nation could hamper consumer spending. Reduction in federal assistance, namely the cut to food stamps, could lead lower-income shoppers to tighten their purse strings, economists said.

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"While we are careful not to ignore the challenges, we are optimistic and hopeful that future disruptions will be limited, allowing employment and business investment to grow all the while giving retailers and their customers the confidence in the economy they need," said Jack Kleinhenz, chief economist for the National Retail Federation.

The trade group also expects retailers will continue pushing big promotions, such as they did during the holidays, to attract shoppers and compete with e-commerce sites. Online price matching has forced retailers to be more transparent about their prices, which means better deals for consumers, and more retailers will offer shoppers the option of free home delivery or buying online and picking up in stores